To: ALL AADA MEMBERS
New powers granted to ASIC earlier in the year allow it to intervene in individual financial products, or entire classes of products. Under these powers, ASIC can take a number of actions including banning a product or product feature, imposing sale restrictions, amending product information or choice architecture.
Media reports suggest that “junk insurance” policies may be among the items receiving early attention. ASIC in its submission to the Financial Services Royal Commission called for a ban on Tyre and Rim Insurance. It has also previously labelled other types of ‘add-on’ automotive insurance as “not fit for purpose”, and products that may cause significant consumer detriment. As such, they would fall within the remit of these new powers.
The AADA will continue to communicate with ASIC and provide members with as much notice as possible should any relevant products be affected by these intervention powers.
ASIC has released a Consultation Paper and a Regulatory Guide, with requests for input by early August. The AADA will be making a submission as part of the consultation process.
The process envisioned by ASIC for the use of these powers includes a lengthy consultation process with those likely to be affected prior to the issue of any intervention order. Such an order would have an initial duration of 18 months. The order may then be extended, amended, or made permanent with approval of the Minister.
The consultation process on these new powers will run until September 2019, when a Regulatory Guide is expected to be issued. It is not expected that ASIC will use these powers until well after that date.